If you’d like to influence what your heirs do after you pass away, you may think that you don’t have all that many options. You can give them instructions in the will regarding what you’d like them to do with your assets, but you can’t really influence how they live their lives.
There is one exception, which is known as an incentive trust. Using it, you can use your inheritance to encourage your heirs to act in ways that you approve of. Let’s take a look at how this would work.
Overcoming negative behaviors
For instance, perhaps you have an heir who engages in negative behaviors such as drug use or constantly leaving their job. If you just leave them an inheritance, you assume that they are either never going to work again or that they’re just going to spend it all to feed this drug addiction.
With an incentive trust, the beneficiaries have to hit certain goals in order to get their inheritance. You could make that goal be something like staying employed for the year or not being arrested on drug charges. Your heir knows that violating these terms means that they won’t get the money from the trust that year. If you set this up to have an annual payout, then you ensure that they have to follow the steps that you’ve designed if they want that monetary benefit.
This certainly doesn’t guarantee that they’ll live the way that you want, but it does give you the ability to use your inheritance to promote positive action. Just make sure you know how to set everything up to meet your goals.